ICICI Securities Places Buy On Midcap Stock, Sees 55% Gains, Soon To Trade Ex-Dividend

ICICI Securities has initiated a Buy on Sobha Ltd. with an unchanged SOTP-based Target Price of Rs 891 apiece. Given the target price, the brokerage sees a strong upside potential of 55% from its current level. Earlier this month, On Jul 01, 2023, in a Board meeting, the company fixed Record Date as Friday, Jul 28, 2023, for Rs 3/share i.e. 30% Dividend for the financial year 2022-23.

Sobha Ltd. is a Real Estate company engaged in construction to operations of townships, housingprojects, commercial premises, and other related activities. With a market cap of Rs 5,464.54 Crore, it is a midcap company.

Record Date For Rs 3/share Dividend

"The Company has fixed Record Date on Friday, July 28, 2023, for the purpose of determining entitlement of the members of the Company to receive Dividend of Rs. 3/- (30 %) per equity share having face value of Rs. 10/- each fully paid-up for the financial year 2022-23. The said Dividend, if declared at the AGM, will be paid within statutory time period, subject to deduction of tax at source as applicable," the company said in an stock exchange filing.

Strong start to FY24, launches remain key

According to ICICI Securities, Sobha Ltd. (SOBHA) achieved record Q1FY24 gross sales bookings of 1.39msf worth Rs14.7bn (up 28% YoY in value terms), aided by the company achieving its highest-ever gross realisation of Rs10,506/psf. The Bengaluru market clocked 0.84msf or 60% of the quarter's volumes and 54% of sales value. The strong start to FY24 comes on the back of a strong FY23 operating performance where the company had clocked its best-ever annual sales performance with gross sales bookings of 5.65msf worth Rs52.0bn.

"The company plans to launch 7-8msf of new projects in FY24, of which 5msf is expected to be in Bengaluru, 1msf in Gurugram and balance in other cities. If the approvals for all the planned launches come through, then the company is targeting 15-20% growth in gross sales bookings for FY24 (we model for sales bookings of Rs57.8bn in FY24E and Rs61.1bn in FY25E). Another key positive in FY23 was the company's net debt levels reducing by Rs7.0bn to Rs16.4bn (net D/E of 0.66x). We maintain our BUY rating with an unchanged SOTP based TP of Rs891/share. Key risks are demand slowdown and rise in debt levels," the brokerage has said.

Stock Movement

The last traded share price of Sobha is Rs 576.15 apiece, up 3.74% from its previous close of Rs 555.40 apiece on BSE. The stock traded its 52-week low on Aug 05, 2022, at Rs 412.40 apiece, while the 52-week high on Jun 15, 2023, at Rs 750 apiece.

The stock surged 7.31% in 1 week, and 8.92% in 2 weeks, respectively. It surged 27.96% in 3 months. However, it declined 10.09% in 1 year. In 3 years, it gave 142.18% positive return. In 5 years, it gave 16.88% positive return.

Disclaimer

The stock has been picked from the brokerage report of ICICI Securities. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.